CoinDesk analysis
Omkar Godbole has his usual daily analysis of the price movements of BTC on CoinDesk. It was last updated 11:14 UTC January 7. Godbole notes that the bears will clearly be beat should BTC break through the key resistance line at $4,140. However, so far BTC has come short of doing that.
Earlier in the day, BTC rose to a two-week high of $4,090 and this ended a week long period of low volume consolidation near $3,800 as well. The move above $4,000 had added credibility to the short-term bearish-to-bullish trend change that was signaled by the three-day chart back on December 20.
Yet the bulls have not been able as yet to break out over the $4,140 resistance level, the neckline of the inverse head-and-shoulders bullish reversal pattern. If BTC does manage to make this break through the bulls would again be back in control.
However, a long-term bullish reversal would be shown only if BTC rises above the 21-month exponential moving average (EMA) at $5,567 presently. When Godboles’s article went to press BTC was trading at $4,000 a 5 percent gain over 24 hours.
Chart analysis
The daily chart shows that BTC has formed an inverse head-and-shoulders pattern, indicating a transition from a bear market to a bull market. A breakout from this pattern usually results in a strong move upwards. BTC could rise well above $5,000 if BTC breaks through the $4,140 on high volumes.
BTC’s price has found acceptance beyond the 50-day moving average (MA). Also, the 5 ad 10-day MAs are both moving upward showing a bullish configuration. The 14-day relative strength index (RSI) also favors the bulls. The setup favors BTC making a breakthrough of the $4,140 resistance level.
On the monthly chart the situation still appears to favor the bears. BTC is trading below $5,567 the 21-month EMA. The bulls face a daunting task to force a long-term breakout as adding to their problems, the 5 and 10-month EMAs are still trending downwards. The two levels are at $4,791 AND $5,651 and form formidable resistance levels.
Godbole’s outlook
Based on his analysis Godbole’s view is: “An inverse head-and-shoulders breakout, if confirmed, would signal a major bullish reversal and could yield a quick move to the psychological hurdle of $5,000. A break above the 21-month EMA of $5,567 could see in a long-run bullish breakout. Failure to take out the neckline resistance of $4,140, if followed by a break below $3,566 (low of the right shoulder), will likely embolden the bears and allow re-test of the recent low of $3,122.”
Present situation
24 hours ago, BTC was trading at $4,024. It rose as high as $4.048. It had a huge drop to a low of $3,526 early this afternoon but raced back to where the drop started immediately. Since then it has not moved too much. However, at 20:28 Central Standard Time it was trading a bit below the $4,000 mark again at $3,969 a drop of $55 dollars from the open. It seems as if the recent rally above $4,000 is stalled for now. The present price of Bitcoin can be found here.
